The holiday season is often a quiet time in the markets and the news. But not this year!

With just a couple days left in 2014, several developments are demanding your attention:

First, political fighting in Greece is causing major turmoil in the European debt and stock markets. Current Prime Minister Antonis Samaras failed to get a commanding majority for his presidential appointee in a third parliamentary vote. That development will force the country to hold snap elections Jan. 25.

Political fighting in Greece is causing major turmoil in the European debt and stock markets.

Unlike in the past, though, Samaras’ New Democracy party has lost substantial ground to another party called “Syriza.” That party is more radical, with leader Alexis Tsipras and his compatriots pushing for much more aggressive debt restructuring and even a “Grexit” from the euro currency.

Fears of a Syriza-led government in the wake of this third vote caused Greek bonds and stocks to plunge in value. That worsened a greater-than-30 percent decline in Greece’s benchmark stock index over the past several weeks, and caused more investors to flee to the safety of “core” European bonds. German 2-year government yields hit a record-low of negative-0.1 percent.

The message for investors like you? Europe remains a dysfunctional place to invest, and political- and currency-related issues continue to pop up every few months. No wonder the euro currency just sank to a fresh two-and-a-half year low just under 1.22 to the dollar.

Second, Libyan militants struck the Es Sider oil port in that country. They set several petroleum tanks on fire at the facility, which can store more than 6 million barrels of crude.

Libya remains one of the most unstable of OPEC’s member-countries. As of November, it was producing only a third of the 1.59 million barrels per day worth of oil it produced in late 2010 — just before government turmoil and in-fighting led to the downfall of Muammar Gaddafi. Production fell further to just 352,000 barrels per day in the wake of the latest chaos.

Crude oil prices have stabilized in the $55-a-barrel area. Concerns about Libyan production, as well as declining production elsewhere driven by the fall swoon in prices, could intensify in early 2015. That would be bad news for U.S. drivers, but good news for investors in beaten-down energy stocks!

Third, yet another Asian airliner has gone missing — this time Indonesia AirAsia flight 8501. The plane disappeared from radar on Sunday while on its way to Singapore from Surabaya in Indonesia.

Despite a search involving more than 30 ships and airplanes, no credible sign of the flight has turned up. Some 162 passengers and crew were onboard and presumed lost.

The disappearance follows by nine months the crash of Malaysia Airlines Flight 370, with 239 aboard. Its whereabouts remain a mystery to this day, despite tens of millions of dollars being spent and thousands of man-hours being expended. And of course, yet another Malaysia Airlines plane was shot down over the Ukraine earlier this year, with 298 lives lost.

“We still haven’t seen any broader, concrete economic impact from these very real human tragedies.”

We still haven’t seen any broader, concrete economic impact from these very real human tragedies — such as less tourist or business travel to and throughout Asia. But it’s worth watching as an investor considering how U.S. investments are already outperforming investments in many funds and ETFs that focus on Asia. Anything that puts further pressure on Asian markets or regional economies would tend to widen that performance gulf.

So let’s talk! Are you concerned about renewed European debt problems, or fighting in Africa (and the Middle East)? How is it shaping your investing strategy? And what about the latest jetliner disaster in Southeast Asia? Do you worry about flying safety? Is that impacting your own personal travel plans — current or future?

I’m getting back up to speed on some of the comments that came in while I was on vacation last week, and I’m excited about helping you navigate the markets in the new year that’s right around the corner.

One commenter, Reader Phil P., said: “I am quite heavily invested in oil stocks and, because of the plunge in the price of crude, I am taking quite a beating. Are there any prospects for a turnaround?”

Good question, Phil! I believe the Saudis are fighting a battle they can’t win (over the longer term) given their incredible reliance on energy prices vis-à-vis our own. As great as the domestic energy boom has been for our country, we have other drivers of economic growth that Saudi Arabia and other OPEC members simply can’t fall back on.

So I doubt this short-term price war will last for long. Many energy stocks are starting to base, and we could see that process accelerate in early 2015 and beyond!

Meanwhile, Reader Richard weighed in on general economic sentiment and how many Americans aren’t sharing in the benefits that Wall Street is reaping. His view:

“What the average working stiff doesn’t feel is his job isn’t what it was. Pay is down and more people are working several jobs to just get by than ever before. There are more married couples that work and they are not any better off than their parents were when just one parent had a job.

“The man on the street that doesn’t have a job for whatever reason — whether counted or not — or is underemployed, is not realizing the market rally!”

But again, that doesn’t necessarily mean there aren’t ways to better your financial lot in life here. As Reader Howard notes, you can make the most of the current economic environment by following these tenets:

“Think independently, specialize in a few investments, own your research, set reasonable profit targets and take profits. Someone told me this a long time ago. It may help.”

I appreciate the words of wisdom Howard. If any of you have your own to add, or would like to weigh in on other topics, you can use the Money and Markets website to sound off!

Other Developments of the Day

Tragedy struck at sea, as well as in the air, over the weekend. A Greek passenger and vehicle ferry caught fire on its way to Italy early Sunday. Seven people are now confirmed dead out of more than 400 on board, though many were fortunately rescued by air and ship despite rough seas in the area.

The battle between Chinese censors and Chinese citizens continues, according to new reports. They suggest that China is blocking access to Gmail accounts through third-party services, the latest move to construct a “Great Firewall” between its citizens and the Internet the rest of us use and enjoy.

Is the American Middle Class being “held down” by government policies designed to oppress it? Or is it really just a widespread crisis of faith that’s holding us back? A breakdown in the belief that through hard work, we can still better our lives rather than have our ambitions be derailed by outside forces? There’s an interesting thinkpiece here at the Washington Post if you have some time to check it out.

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{18 comments }

BillyMonday, December 29, 2014 at 4:54 pm

Mike,

Its REAL simple. Everyone now knows it’s world wide Global Elitism that is causing the Global Middle Class to be “held down” as you state, although your choice of words are very mild indeed. The Global Elites include BOTH Business AND Government Elites that have concentrated the most wealth, power and control of the world’s assets, which of course include people, that we have seen in the history of mankind. Makes the historic empires such as Greek, Roman, even British Empire etc.. look like complete child’s play based on today’s massing of power, control, and wealth….

H. Craig BradleyMonday, December 29, 2014 at 5:20 pm

MICHIGAN HOTSPOT

Muslims in Michigan can game the food stamp and welfare system to their great benefit. Federal entitlement fraud is RAMPANT!

At the same time, the WSJ reports Wayne County is sending out thousands of foreclosure notices for homeowner who have not paid their ( inflated) property taxes. Home values have already declined 90% and the City of Detroit just finished going through Federal Bankruptcy Court.

Its hard to believe Michigan lawmakers and government still have not come close to restructuring their economy (to grow) and are still punishing wealth and small business ( to the extent they have not already left the state for “greener pastures”). The economic trend is still decidedly downhill in much of Michigan.

MikeMonday, December 29, 2014 at 5:23 pm

After checking gold price charts, there is now proof that over the Christmas (boxing day) holiday the Asian markets increased the value of Gold from 37781 USD/Kg on the 26th December to 38456 USD/Kg and then when the American markets re-opened on the 29th December then Gold suddenly dropped back again to 37994 USD/Kg

MarilynMonday, December 29, 2014 at 5:53 pm

Re: the Chinese censors. Obama is trying to take over our internet. Do you suppose he wants to be a censor, too?

PeterWMonday, December 29, 2014 at 6:00 pm

I live in Vancouver, BC, we learn to enjoy the Sun when we get it,

The Sun is shinning, enjoy it, as by fall 2015 the storm clouds of public opinion will rain down upon the US and all of the West including Canada.

As I see it, the last door of escape, closed end of May 2011.

BobSMonday, December 29, 2014 at 6:01 pm

Mike, a bit of background on the Grexit:

In the aftermath of the First Crusade, returning knights were ordered to besiege and slaughter the residents of a Greek city, because it’s Bishop refused to share Church funds with the Bishop of Rome. This led to a split in the Christian church. Backers of the Bishop of Rome began calling Rome, “The Holy See” and “The Vatican”, and asserted that the Bishop of Rome, “il papa”, was head of every church, not just the ones in the Diocese of Rome. The Roman bishop’s supporters became known as the “Roman Catholic Church”. Those who disagreed became known as the “Eastern Orthodox Church”.

Eight centuries of distrust, between the rival churches, has not been helped by the occasional war, most recently in the 1940 German invasion of Ukraine and of Greece. Orthodox Ukrainians and Russians regarded Hitler’s twisted swastika as a symbol of Roman conquest. (Even though the Swastika actually originated in India, as a symbol meaning “health”…wrong impressions are powerful.). Last year’s strife in Ukraine, was largely fought along sectarian lines. Orthodox Ukrainians have made common cause with Orthodox Russians. Roman Catholic Ukrainians seek to merge with the European Union, viewing the EU as a union of fellow Catholics (even though it is not.).

Greece will be a turning point, around which the Ukraine crisis is determined. If cool heads prevail, and Europe rises above it’s barbaric past, embracing tolerance, a multi-ethnic EU will survive this challenge and grow stronger. If Europe fragments again, along Orthodox vs Roman Catholic fault lines (as it nearly did during the Yugoslav conflict of the 1990’s), Greece will split from Europe. Serbia will ally with Russia. Croatia will ally with whatever part of Europe remains in the EU. Bosnia will seek allies in the Arab world, for it is a Muslim nation. And Turkey either will, or will not, find NATO a safe place with which to ally.

Sixty years ago, Greece and Turkey stayed in Nato, albeit uneasily, because Stalinist Russia sought to abolish by decree, the religious beliefs of 90% of it’s citizens, in a show of state power. Today, it is the Wahhabi militants who created Al Qaeda and ISIS, who pose the principal threat to religious liberty. However violent the Crusaders once were, the present Pope is unwilling to ask the non-religious majority of Socialist Europe, to join a sectarian battle with the historic allies of Russia. There likewise are no militant Orthodox leaders. Nor militant Jewish leaders. There are significant numbers of Islamist militants, who seek to control the Arab world by making war on the rest of us, and it will be necessary to deal with the challenge they pose, no matter who governs the neighboring nations.

A Europe that expels ISIS by expelling all Muslims, will push Turkey out of NATO and into alliance with Russia. It will be very surprising if Russia proves more tolerant of Muslims, than do some of the ethnic-cleansing supporters currently seeking election in various EU nations.

The challenge to both Europe, and NATO, is to adapt to the new threat environment of the post-9/11 world. Russia, try as we might, refuses to become a renewed Soviet Union, despite Beltway politicians’ best efforts to make it happen.. Wahhabi militants, try as we might, cannot be reshaped into freedom fighters, despite Beltway politicians’ best efforts to depict them as such. And the Joint Strike Fighter project, that’s run up a trillion dollars of debt at the Pentagon alone, is useless in a guerrilla conflict that’s fought by suicide attackers with homemade bombs and swords.

The smartest move we can make, is to own any investment that does not depend on European stability and/or a renewed Cold War, to maintain its’ value. Because neither proposition looks very probable at the moment.

bill stappMonday, December 29, 2014 at 6:14 pm

Mike…..Could we all please stop worrying about Greece.Greece is not relevant unless of course you have a friend or loved one on one of their ferries or were dumb enough to get stuck with one of their bonds.The European Union of course is very relevant but Greece comprises a very small portion of that.Sometimes I think you guys should be teaching a class on foreign policy or geography.

ianMonday, December 29, 2014 at 7:14 pm

Yes Bill very small indeed but the money poured into Greece,if it decides to say sod you and leave the Euro and does want to pay back its debt.Look out below

Axel KornfuehrerMonday, December 29, 2014 at 6:45 pm

Mike, apropos your sentence “…the belief that through hard work, we can still better our lives…” — That “hard work” gets us into a better economic position has been an American mantra for generations. Yet it is and has always been a flawed statement. I know people who work 2 and sometimes 3 menial but societally very necessary jobs. They work harder than I ever have had to (and I am comfortable middle class). And yet these people have no hope of becoming “middle class”. It’s time to face up to the fact that “hard work alone will get you ahead” is an illusion and a peculiar American illusion.

VaughnMonday, December 29, 2014 at 6:52 pm

In the U.S. your chance in being killed in a commercial airline crash is probably 1 in 60 million over the past six years.

The last multiple fatal death accident was February 12, 2009 when 50 people were killed and this was a feeder airline. The last fatal crash involving a major domestic carrier was in November 2001.

ianMonday, December 29, 2014 at 7:37 pm

Just think,if our stupid leaders had decided not kill Saddam Hossien there would be peace in the middle east,sure he killed some of his own people,and now we have killed more than 10 times more.How many Americans,British lives been lost,what for.Democracy.Thats BS.He ruled by iron hand.Now the place is Hell.I don’t recommend it for your vacation hotspot.And If we get rid of theSyria leaders.?If the Arabs want democracy then I will believe Jesus was American

FredMonday, December 29, 2014 at 9:20 pm

There is SOME truth in your statements. Muslims base their faith on a slave-master relationship with their god. Since they want theocracies, the same relationship must exist in government. As a result, they tend to disfavor democracy. And indeed, very few exist in the Muslim world. We should stop trying to force democracy on them. Evolution takes time…..in their case perhaps another 200 years. They will probably have to drop Islam to eventually embrace democracy. In the meantime, we just need them to keep their violent behavior at home….mostly in the Middle East…..and stop importing it to the West.

HYMNMonday, December 29, 2014 at 8:22 pm

There was already bad things in store for Europe and its stock,bonds and debt, the Greek elections just brought them to ahead sooner. The proud Greeks had to go the way they did, Belgium and Goldman Saks threatened them to do as they say. So this was the Greeks giving them the finger. Just as the Swiss had a chance to rock the boat and show the central banks for the crooks they are. So now do the Greeks, painful at first but a breath of fresh air,fresh thinking and a vote against continued servitude to the Ponzi Scheme.

anthony gTuesday, December 30, 2014 at 1:49 am

Just how far can the debt pyramid climb?

SteveTuesday, December 30, 2014 at 2:52 am

Mike, I’m at the age where my recommended mix is 60/40. Do you still think I should avoid bonds. If so,where do I put the 40%?

David in Williamsburg, VATuesday, December 30, 2014 at 9:20 am

Mike, Despite our ‘good intentions’, our meddling in Libya, Egypt and Iraq has caused the whole area to be a disaster and we are several Trillion of $’s poorer. Let’s hope we have more sense than to meddle further, we already unseated an elected President in The Ukraine despite his ‘faults’, but it looks like we will try our luck again. What is the expression, ” Doing the same thing over and over and hoping for a different result is the definition of Insanity”.

DougTuesday, December 30, 2014 at 8:48 pm

Consider that most of foreign policy since WW2 has been an effort to support foreign regimes that cater to our consumption of their resources, primarily oil. If we had simply let them sort their own issues out for the last 20 years we would have no debt. Yes no debt not deficit. Now we are virtually oil independent. We don’t need to meddle. Our foreign policy could afford to be Swish like. We could be the financial rock in the world instead of the biggest spenders on war in history. No more veterans, no more war dead, no more crippled veterans to ignore and mistreat. Do some financial planning around that.
Way better to have a pissing war with North Korea about Hollywood, very good diplomatic progress.

Bob pSaturday, January 3, 2015 at 12:59 pm

so the oil companies and oil producing countries are getting hurt in theoil price decline.Good for them. Those blood sucking money grubbers have been screwing us working poor forever. Now let them choke on their oil. They deserve what they are getting..